Monday, June 30, 2014

THE NEW Patriotic Party (NPP) Member of Parliament for Talensi and Deputy Ranking Member of the Committee on Energy and Mines, Robert N.D. Mosore, has urged Ghanaians to brace themselves up for more fuel shortages as a result of lack of concrete policy direction on energy by the ruling National Democratic Congress (NDC).

According to the Deputy Ranking Member, since the NDC had failed to take advantage of the downstream petroleum processes resulting from exploration of Ghana’s oil, and rather chosen to rely heavily on the importation of finished products through the Bulk Distribution Companies (BDCs) in smaller quantities, fuel shortages would continue to live with Ghanaians.

“After Ghana had found oil in commercial quantities, the NPP government signed a Memorandum of Understanding with the Tema Oil Refinery (TOR) to build an additional refinery at TOR with capacity of 150,000 barrels per stream day which was meant to cater for the domestic needs of the country and export to the West African market,” he recalled, stressing that when the NDC won power in 2008 it completely abandoned that good initiative.

The MP, who was speaking exclusively with DAILY GUIDE in Parliament on the current fuel shortage facing the nation, said the NDC government, upon assuming power, shelved that pragmatic move and adopted a different government policy which result Ghanaians are seeing today.

“If the government had decided to refine Ghana’s crude oil, we could have gotten gasoline, gas oil, kerosene, dirty oil as well as bottom products which could be used to manufacture fertilizer and bitumen,” he said, pointing out that government’s approach to the energy sector was a total misplacement of priorities and policy direction of petroleum and energy issues.

He said the only solution to the constant fuel shortages was for the government to support TOR to revamp its processing plants so as to start producing at its maximum capacity.

Talking about subsidies on petroleum products, Mr. Mosore said categorically that there is no government subsidy on petroleum products such as petrol, gas oil and liquified petroleum gas, except pre-mix fuel; and challenged the government to publish petroleum products which are subsidized for the public to know.

The issue of severe shortage of fuel was raised in Parliament yesterday by the NPP MP for Asene/Akroso/Manso, Yaw Owusu-Boateng, who rose on a ‘point of order’ told the Speaker that the fuel shortage in the country had brought more hardships to the people and as their representatives, the Speaker must allow them (MPs) talk about it.

The Speaker, Edward Doe Adjaho, said the issue raised by the MP was a very important one but he (MP) was not using the right channel to raise the issue on the floor for proper debate.

“Hon Member, this issue has not been raised in a statement by any Member for me to decline,” Doe Adjaho said, adding that Owusu- Boateng’s intervention on the fuel situation was not consistent with the rules of the House and that the rules must be followed.

Institutions of state were established to carry out specifically mandated duties. However, in the case of the Tema Oil Refinery (TOR), the story is different.

Originally known as the Ghanaian Italian Petroleum (GHAIP) Company and incorporated as a private limited liability company under the Companies Ordinance (Cap 193) on December 12, 1960, it is decreed to process crude oil and market petroleum products.

In an exclusive interview with The Informer, a very worried worker of the National Petroleum Authority (NPA) has blamed the current acute fuel shortage following the action of the Ghana Chamber of Bulk Distribution Companies (BDCs) on Government.

Without mincing words, the source said, the present-day embarrassment suffered by Government regarding the BDCs decision is as a result of government’s failure to adequately resource the only refinery in the country - TOR, which is presently producing under capacity.

“Deliberately or whatsoever, government has refused to resource TOR to enable it carry out its core function of processing crude oil for onward-sale to the Oil Marketing Companies (OMCs) and had allowed the BDCs to take over the operations of TOR,” the source indicated.

“TOR has eventually become a white elephant due to lack of resources to effectively operate,” the concerned NPA worker added.

According to the source, the action by the BDCs is a complete sabotage to make the Mahama administration unpopular, which unfortunately has been blessed by some unscrupulous individuals at the NPA.

Asked who the individuals are, he said “I will not mention names for now; but I can tell you on authority that some officials in the employment of NPA are in cohort with the BDCs to do the government in”.

“If this is not a clear sabotage, why should NPA refuse the Bulk Oil Storage & Transportation (BOST) Company Limited the permit to release unto the market some of its stocks to mitigate the current fuel shortage state of affairs which is embarrassing to government,” the source unequivocally pointed out.

“Government, as a matter of urgency, must resource TOR to enable it operate in full capacity, if Government wants to save itself from further embarrassment in the hands of the BDCs,” the source concludes.

However, credible checks conducted indicate that, of the twenty-one (21) BDCs currently operating, not even half can boast of a storage facility; a requirement that the NPA should insist on before approval for operation.

From the sterling revelations, it therefore stands to question whether the NPA is serving the interest of government or the BDCs.

The BDCs according to reports, claim the Government of Ghana owes them Ghc 1.8 billion, hence their inability to get supplies from their international partners.

Friday, June 27, 2014

HYDERABAD, India (AP) - A state-owned gas pipeline exploded and burst into flames Friday, killing at least 14 people, destroying homes and forcing the evacuation of neighboring villages in the southern Indian state of Andhra Pradesh, authorities said.

Flames rose more than 80 feet (25 meters) into the air, scorching the tops of coconut and palm trees and sending dense black clouds of smoke into the sky, witnesses said. Villagers ran out of their homes and crowded the streets. Scores of houses and shops were gutted, officials said.

Vandana Chanana, a top official of state-run Gas Authority of India Ltd., said 14 people died and 15 others were injured in the fire in the state's East Godavari district. Doctors said at least six of the injured were in critical condition, company officials said.

"The fire has been extinguished now and rescue operations are on," Chanana said.

Andhra Pradesh Home Minister N. Chinna Rajappa said the explosion occurred at about 5:30 a.m. in Nagaram village, the site of a connecting station for the gas company.

The explosion sent flames shooting into the pre-dawn sky. The fire burned for more than three hours before it was brought under control, Rajappa said.

"The extent of damage is being assessed," he said.

Company officials said it was too early to say what caused the explosion. In New Delhi, Oil Minister Dharmendra Pradhan said the federal government has set up a panel to investigate the cause.

Nagaram residents said they had complained that the gas pipelines had not been properly maintained, but were ignored.

"People are angry that GAIL authorities didn't pay heed when they complained that the pipes had become rusty," said state Finance Minister Yanamala Ramakrishnudu.

Residents of neighboring villages were evacuated to safer areas, said East Godavari district collector Neetu Kumari Prasad.

Nagaram is about 560 kilometers (350 miles) east of the state capital, Hyderabad.

Two weeks ago, six people were killed and 29 others injured in an explosion and a subsequent gas pipeline leak at India's biggest government-run steel plant in the central Indian state of Chattisgarh.

Associated Press writer Chonchui Ngashangva in New Delhi contributed to this report.

- Diezani Alison-Madueke highlights role Nigeria can play in supporting long-term gas supply security for the EU -

- Mrs Alison-Madueke also gives keynote address at the event, highlighting the strong relationship between OPEC and EU countries -

On the side of today’s 11th EU-OPEC Energy Dialogue Ministerial Meeting taking place in Brussels, Belgium, Diezani Alison-Madueke, the Honorable Minister for Petroleum Resources for Nigeria and Alternate President of the OPEC Conference, held discussions with Günther Oettinger, the EU Energy Commissioner.

The discussions focused on the role Nigeria can play in supporting the EU’s energy sector priorities, and particularly the long-term security and diversification of gas supplies. Alison-Madueke highlighted that gas production has increased to over 8 billion cubic feet per day, and Nigeria is the eighth largest gas producer in the world, and sixth largest gas supplier to Europe.

Alison-Madueke emphasized that furthermore, Nigeria has over 180 Tcf of discovered reserves and up to 600 Tcf of undiscovered gas reserves, so significant investment is planned to support expansion of the sector over the coming years. While increasing domestic power generation is a priority for the government, export capacity will also rapidly grow, particularly as new LNG projects are completed.

Oettinger said that he recognizes the long-term potential of Nigeria’s energy sector and would welcome further discussions to explore ways for greater collaboration between the EU and Nigeria.

Speaking following the discussions, Diezani Alison-Madueke commented: “With significant investment planned and growing reserves and production, Nigeria has the capacity to become a major long-term partner for the EU in ensuring security of energy supply. It was an extremely productive meeting with Oettinger, and I look forward to continuing to work with him to build an even stronger relationship between Nigeria and the EU.”

Earlier in the day, Alison-Madueke gave a keynote address at the ministerial meeting, in her role as Alternate President of the OPEC Conference, during which she highlighted the strength of the trade and energy relationship between OPEC and EU countries. She noted that OPEC countries supply the EU with over thirty per cent of annual oil consumption and nearly twenty per cent of annual gas demand. In turn, the EU is playing a vital role in supporting the development of renewable energy technology to support the long-term diversification of primary energy sources.

She continued by highlighting the role of OPEC in ensuring stability, transparency and predictability in the international oil markets, which is essential as the global economies recover and strengthen. She stated that longer term, OPEC member countries will continue to play an essential role, and it is anticipated that they will provide as much as 11 Mbpd out of the anticipated 18 Mbpd of additional oil required to meet the expected worldwide demand growth by 2035.

In order to maintain growth and investment, Alison-Madueke emphasized the importance of maintaining reforms in emerging economies. She noted that one such reform in Nigeria is the Petroleum Industry Bill, currently before Nigeria’s National Assembly, which will change the face of the country’s petroleum operations and ensure they remain in line with international standards and best practices. She noted that reform in the energy sector will support the longer-term economic priorities of Africa’s largest economy, with significant investment planned in infrastructure, power generation, industry and agriculture, as well as in health and education services. This approach is similar to other OPEC member countries, which are actively pursuing economic diversification strategies.

Wednesday, June 25, 2014

Meritage Midstream Services has announced that the first crude oil unit train loaded at its Black Thunder Terminal departed the Wyoming, US, facility on Friday, 20 June via the Union Pacific railway.

The Black Thunder Terminal is a joint venture between Meritage Midstream and Arch Coal. Served by both the Union Pacific and BNSF railways, the terminal is located at the Black Thunder mining complex in Campbell County, Wyoming, in the heart of the Powder River Basin's drilling activity.

The 99-car train is carrying 70,000 barrels of crude oil to a refinery on the East Coast for the terminal's anchor shipper, Black Thunder Marketing.

All of the train's tank cars are new and meet the safety standards adopted earlier this year by the American Association of Railroads.

Phase one truck-to-train transload service has been fully operational at Black Thunder since the beginning of March. Current transload capacity is 10,000 barrels per day.

Landing and loading space is available. Construction of phase two high-speed loading facilities is expected to begin later this year.

The phase two facility will include up to four 100,000-barrel storage tanks and a 15-car rack system capable of loading 15 to 18 cars per hour.

Target total loading time is 15 hours. High-speed loading service is expected to be available in 2015. The terminal's location at the Black Thunder mining complex provides ample room for additional expansion to meet customer needs.

The Black Thunder facility is unique because it is the only crude oil terminal in Wyoming located at a coal mine.

- See more at: http://www.tankstoragemag.com/industry_news.php?item_id=7944#sthash.1v4xodaC.dpuf

BRUSSELS — OPEC is ready to pump extra oil in the event of any supply disruptions caused by Iraq and its biggest producer, Saudi Arabia, can ramp up to capacity if needed, oil officials said on Tuesday.

For now the market is well-supplied and prices above $114 a barrel are the result of market nervousness, OPEC Secretary General Abdullah al-Badri said.

An official from Saudi Arabia, the only OPEC member with significant spare capacity, said it was committed to supplying the market if needed.

Saudi Arabia, which produces around 9.7 million bpd, has the ability to pump to its full capacity of 12.5 million bpd, the official told Reuters.

The Organization of the Petroleum Exporting Countries earlier this month agreed to keep its output ceiling unchanged at 30 million barrels per day (bpd).

Since then, concerns that violence in Iraq could disrupt supplies have stoked volatility and driven international benchmark Brent above $114 a barrel.

"The ongoing uncertainty means that no sharp price slide is likely,"' said Carsten Fritsch, analyst at Commerzbank. "In the next few weeks, we expect to see Brent trading at above $110."

Disruption in Iraq would aggravate the impact of outages in Libya, Syria and sanctions on Iran, which have already curbed production by almost 3 million bpd, or more than 3 percent of daily global demand.

In Libya, where unrest has crippled oil output, an oil port that reopened at the weekend closed again and production is around 270,000 bpd, a fraction of the 1.6 million bpd it produced before the 2011 civil war.

Badri said he understood there was no production problem so far in Iraq. Production in the south of the country was mostly intact, he said.

“As of now what we see in the price today is not because of any shortage of supply. The market is well-supplied,” Badri told reporters, adding that OECD commercial stocks stood at 57.5 days of forward demand. He declined to give a figure on OPEC's spare capacity.

Badri was speaking in Brussels, where he took part in the latest regular round of EU-OPEC dialog, an exchange of producer-consumer views.

He also said there was no reason for now to call an emergency OPEC meeting, although the producer group was willing to step in if needed.

Aside from geopolitical supply risks, investors will focus this week on the latest surveys of U.S. oil supplies.

A Reuters survey forecast U.S. crude inventories fell 1.3 million barrels on average last week, while product stockpiles rose.

BRUSSELS — The head of OPEC, the group of major oil exporters, says recent crude price increases are to blame on market fears caused by the crisis in Iraq but not on a drop in output.

OPEC Secretary General Abdullah Al-Badry said Tuesday that Iraq is “still producing as normal,” with 95 percent of its capacity in the country’s south being unaffected by the violence.

The price for a barrel of Brent crude, the key international benchmark, has risen from a stable level of $110 held over the past four years to about $115 following the takeover of some parts of Iraq by Sunni insurgents.

Al-Badry says prices are not rising because of supply shortages but because the market is “nervous” and investors are speculating.

Monday, June 23, 2014

After three years of commercial production of oil on the Jubilee fields, Ghana has now exceeded the long awaited two billion revenue mark.

Since 2010 when Ghana started producing oil in commercial quantities, stakeholders in the sector, namely, Tullow oil, Kosmos Energy, Anadarko, Government of Ghana and Sabre, have produced 86.93 million barrels of oil and Ghana’s share of production has been 16.5 million barrels.

In 2011 the country realized a sum of US$470 million from Production. The figure increased to US$567million in 20012 and US$730 million from oil production. In the first half of 2014 Ghana has already generated US400 million from the projected US$ 820 million for the year, bringing the total revenue from oil to US$2.167 billion. Ghana is likely to exceed this year’s projection as a result of the introduction of the flaring system enabled by the government of Ghana over a period the re-injection of associate carbon into the oil wells to speed oil flow.

As a result of a redetermination of the Jubilee Field’s Original Hydrocarbon in Place (OHIP) across the Deep Water Tano and West Cape Three Point Blocks, Ghana’s share of petroleum declined slightly under the Unit Operating Agreement from 13.75% to 13.64%.

Redetermination is a process by which owners in a unit agreement commit that at one or more dates in the future, they will revisit the unit interest due to information received from new wells or production data, and where appropriate, adjust the Tract Participations to reflect the proportion of the reservoir and associated hydrocarbons that underlie their participation arising from the new data.

Pursuant to the terms of the Jubilee Field Unitization and Unit Operating Agreement (UUOA), the percentage share of petroleum of the Jubilee partners is subject to a process of redetermination. Any party to the Jubilee UUOA with more than a 10% Jubilee Unit Interest may call for a second redetermination after December 1, 2013. The redetermination of the blocks led to the distribution (tract participation) of the OHIP of 50% each from the two Blocks to be realigned to tract participation within the unit area in a ratio of 45.6334% for the Deep Water Tano Block (DWT) to 54.3666% for the West Cape Three Point (WCTP) Block instead of the original 50% each of the two blocks. This exercise has affected Ghana‟s Participating Interest by a small margin reducing the country‟s entitlement to oil under Carried and Participating Interest to 13.640% instead of the original 13.75% 1 This took effect from 1st December, 2011.

The Ghana Revenue Authority assessed Tullow Oil Ghana for petroleum income tax in the 4th Quarter of 2012 on a taxable income of US$114,885,998. The tax liability of US$40,210,099.56 was discharged in January 2013 and it is therefore being accounted for by the GRA as part of 2013 taxes collected.

The GRA was unable to assess and collect any Capital Gains Tax (CGT) on the assignment of interest transactions that took place during the year between EO Group and Tullow Oil as well as Sabre Oil and Gas and PetroSA. This was because current tax laws affecting operations in the upstream petroleum sector contain no provisions for CGT.

The Jubilee and Saltpond Fields were the only producing fields in 2013. The total number of barrels produced from the Jubilee Field for the period, January to September 2013, was 27,060,737 barrels, compared with 18,423,621 barrels for the corresponding period in 2012. As indicated in the 2013 national budget ,production forecast for the Jubilee Field, , was 30,419,465 barrels, based on an average production of 83,341 bopd.

The average daily Jubilee production from January to September 2013 was 102,503 bopd and it is expected that the projected production volume for 2013 will be achieved, in spite of the shutdown for planned maintenance of the FPSO that took place from 20th to 28th September, 2013.

The main factor that accounted for the increased production in 2013 was the increased number of producing wells on stream in the Jubilee Field, since the number of producing wells commissioned has a direct impact on the production volumes. The producing wells were increased from three (3) in 2010 to twelve (12) in 2013.

The total barrels of oil produced from the Saltpond Field for the period January to September 2013, was 78,376 barrels, compared with 77,374 for the full year of 2012.

The average achieved Jubilee price for January to September 2013 was US$107.246 (where achieved price means the price at which the Ghana Group liftings were sold)

For the period January to September 2013, GNPC lifted crude oil five (5) times on behalf of the State. This involved 4,977,922 barrels of oil which yielded US$533.86 million (GHȻ1,025.05 million) of petroleum revenue to the State, as shown in Table 3.

Total petroleum receipts (i.e. proceeds from Jubilee lifting’s and other petroleum receipts) as at the end of the third quarter of 2013 was US$707.28 million (GHȻ1,358.18 million). This compares with a total 2013 Budget estimate of US$581.72 million (GHȻ1,122.72 million)

In spite of all the growth in revenue from the exploration, Ghana’s share of the Jubilee revenue lack the pace for growth and government is being asked to ensure that revenues are well accounted for.

Friday, June 20, 2014

Insurance and P&I service provider Skuld has warned of a disagreement between the Nigerian army and the Nigerian marine police over the placing of armed guards on board vessels.

The Nigerian army has started to detain/arrest vessels with armed guards on board even if they have been provided by the Nigerian marine police.

The Nigerian army considers that it has jurisdiction over the territorial sea and EEZ (exclusive economic zone), Skuld said.

It is not allowing armed guards on board vessels, even from the Nigerian marine police, whereas the Nigerian army is only providing patrol boats/escorts.

The International Group of P&I Clubs is aware of the problem and has been informed that the IMO is in contact with the Nigerian Maritime Authority to have the situation clarified.

In another alert, the latest security advisory for Nigeria issued by BIMCO effectively renders the use of armed guards commercially placed on vessels illegal.

This is highly likely to have major repercussions for a shipowner and the charterer should they be caught with unauthorised armed police, or marine police on board warned maritime security company GoAGT.

According to BIMCO, there have been a number of ‘blue on blue’ incidents in the last six months and the industry as a whole is concerned about the safety of crew transiting the region.

This warning comes exactly a month after a vessel was boarded near Port Harcourt and had her cargo stolen while the crew were held hostage, despite a Nigerian Naval vessel being in the vicinity.

Nick Davis, GoAGT CEO, said: "BIMCO have taken a strong, proactive stance on this issue. The incident a month ago was entirely preventable with the use of an unarmed advisor and a good radar lookout. The crew were very lucky not to have suffered injury, had they been able to react quicker and retreated to the citadel the situation would have diffused quickly.

“The primary concern should be the safety of the personnel, theft in the Gulf of Guinea is unfortunately something shipowners and managers have to deal with, with an advisor on board vessels can avoid a hostage situation during a boarding.

"Merchant vessels approaching Nigeria from within the Gulf of Guinea must understand that the Nigerian Navy are the only authorised body to offer protection via escort vessels only and not with armed guards on client vessels. The option for Joint Task Force, or police protection is only available within the riverine deltas and not on the high seas. There is a clear and present danger to the safety of the crew with the only effective solution being to employ an advisor who can safely get the crew to the citadel, which must be well-equipped with communications equipment.

"Currently, the use of armed guards in the region falls into a legal grey area. Shipowners and managers being offered so-called 'authorised' armed protection within the Gulf of Guinea by private maritime security companies are well advised to seek advice from BIMCO, their flag state and the local Nigerian embassy, or consulate for the latest advice and protocol prior to parting with money for a service that could have severe operational interruption to normal trading.

"There is no satisfactory way for managers and owners to perform due diligence on locally sourced guards. It has been reported in the past that incidents of product theft, or kidnap, have been targeted against vessels carrying guards. Due to the high risk of operating in this area, shipowners and managers must do all that is in their power to ensure the crew remain safe with thorough training, enhanced watch keeping and a well prepared plan of action in case of an incident," Davis concluded.

Thursday, June 19, 2014

Ethnic divide

Iraq is a country deeply split along sectarian lines. There are three major sects: Shiite Muslims, Sunni Muslims and Kurds. Iraq's prime minister, Nuri al-Maliki, is a Shiite Muslim. Sunni Muslims -- the minority in Iraq -- often find themselves left out. Some experts say that ISIS has found a base among Iraq's Sunni community.

Baghdad, Iraq (CNN) -- As Islamist militants battle Iraqi security forces for control of towns and cities not far to the north, Baghdad has taken on the tense feel of a city under siege.

There's a heavy police and military presence on the streets of the Iraqi capital and at checkpoints that sometimes appear to pop up overnight.

Nowhere is the sense of fear more palpable than at Baghdad International Airport, where hundreds and hundreds of people wait in long security and check-in lines for one of the few, precious seats available on flights out of Iraq.

After Iraq's second-largest city, Mosul fell last week to the militants -- barely opposed by Iraqi security forces, who abandoned their weapons as they fled -- the southward advance of the Islamic State in Iraq and Syria, or ISIS, has been relentless.

Many at the airport are seeking safety in Iraq's Kurdish-controlled north, particularly Irbil, or in the southern port city of Basra. Others are trying to get out of the country altogether.

To accommodate the exodus, airlines have begun adding flights and, in some cases, much larger planes. Still, there are few seats available as most flights, according to travel agencies, are sold out weeks in advance.

Where once there was one Iraqi Airways flight a day to the northern city of Irbil, there are now three.

On Thursday, a Royal Jordanian flight flew from Amman to Baghdad nearly empty. But it is oversold for its return, a flight attendant said.

The fighters are now within 40 miles of the capital, where at least three people were killed and 15 injured Thursday when a car bomb and two roadside bombs exploded in three separate areas, police officials there told CNN.

A few miles outside of the Baghdad airport, dozens of men waited in lines in the sweltering sun to answer Prime Minister Nuri al-Maliki's call to join the military's fight against the Sunni extremists.

The Prime Minister, whose Shia-dominated government is accused of fostering sectarian tensions by marginalizing Iraq's Sunni and Kurd minorities, is facing growing calls from some quarters to stand down.

As the United States weighs its options, the Pentagon has presented President Barack Obama with a plan to send up to 100 special operations advisers to Iraq to work along with that country's military, several U.S. officials told CNN on Thursday.

Obama has not yet signed off on the plan, the officials said.

Battle for Baiji oil refinery

Meanwhile, Iraqi security forces and Islamist militants clashed again Thursday as they battled for control of the nation's main oil refinery.

Conflicting reports have emerged as to who has the upper hand.

In a phone interview on state-run al-Iraqiya TV on Thursday, Col. Ali Al Qureshi, the commander of troops responsible for protecting the refinery in Baiji, some 140 miles north of Baghdad, said Iraqi armed forces were in full control.

He said the militants had suffered dozens of casualties in the course of multiple attacks but had failed to take the refinery complex.

But police officials in Samarra and Baghdad said ISIS fighters control 60% of the oil refinery.

Dozens of vehicles full of militants launched a fresh assault on the sprawling refinery complex around 4 a.m. local time Thursday, the police officials said. Iraqi security forces are still trying to expel them and regain the control.

Al-Iraqiya television reported that 40 "ISIS terrorists" were killed during the clashes.

The Baiji refinery is a key strategic resource because it refines much of the fuel needed for internal consumption. There are already long lines at many gas stations across the country. Iraq is also a major exporter of fuel from oil fields in the country's south.

As the U.N. World Food Programme highlighted the plight of a half-million Iraqis forced from their homes by days of fighting, the European Union announced it would give an additional 5 million euros ($6.8 million) in assistance to Iraq, taking the total to 12 million euros this year.

"This fresh wave of violence has terrible consequences for vulnerable children, women and men," said EU official Kristalina Georgieva.

Calls for change of leadership

Al-Maliki struck a defiant tone Wednesday in a televised weekly address, saying Iraqi forces were on the "on the rebound" after their initial shock in the face of the militants' lightning advance.

"We will respond and keep the momentum," al-Maliki said.

But despite al-Maliki's words, there's a growing chorus of calls -- both in Washington and in the Arab world -- for him to go if there is to be any hope of unifying Iraq as the Islamic militants advance.

There's hope that a government bringing the Sunnis and Kurds into the political process would curb sympathies for ISIS by those who find themselves on the outside.

However, al-Maliki maintains a strong grip on power and his party recently won national elections.

The Prime Minister's office has not received any official statement asking for him to step down, al-Maliki adviser Ali al-Moussawi told CNN on Thursday.

"Nobody said this, and we have not received any official statement suggesting that al-Maliki has to leave his position," al-Moussawi said.

While some on Capitol Hill aren't shy about saying his days as the Iraqi leader should come to an end, at the White House it's more of a whisper.

Senior U.S. officials tell CNN that the Obama administration is of the belief that al-Maliki is not the leader Iraq needs to unify the country and end sectarian tensions.

The officials, along with Arab diplomats, say the White House is now focused on a political transition that would move Iraqis toward a more inclusive government -- one without al-Maliki that would include Sunni, Shiite and Kurdish factions.

The chairman of the Joint Chiefs of Staff, Gen. Martin Dempsey, told Congress that the United States has received a request from the Iraqi government to use its air power in the conflict.

The lightning-fast advance by ISIS has seen large portions of northern Iraq fall under its control. ISIS wants to establish a caliphate, or Islamic state, that would stretch from Iraq into northern Syria.

Curbing sympathies

A change in government in Iraq can't come too soon for some in Washington Sen. Dianne Feinstein, D-California, the head of the Senate Intelligence Committee, said al-Maliki has to be convinced that it's in the country's best interest for him to retire.

"I think that most of us that have followed this are really convinced that the Maliki government, candidly, has got to go if you want any reconciliation," she said this week.

Publicly though, the White House isn't being as direct.

Earlier this week in a Yahoo News interview, Secretary of State John Kerry said the United States shouldn't be dictating to the Iraqi people that al-Maliki needs to resign.

"Now, we clearly can play an encouraging, consultative role in helping them to achieve that transition, and we have people on the ground right now," he said.

U.S. options

On Wednesday, Obama huddled with congressional leaders, briefing them on options he is considering.

A few hours earlier, Defense Secretary Chuck Hagel and Dempsey said they were working out details on possible U.S. steps that could include airstrikes on Sunni militants advancing through northern Iraq.

House Speaker John Boehner demanded that Obama lay out a "broader strategy" but sidestepped a question about whether he supported airstrikes.

Meanwhile, Senate Majority Leader Harry Reid spoke out forcefully against sending U.S. service members into Iraq. "This is an Iraqi civil war, and it is time for Iraqis to resolve it themselves," he said.

In their meeting, Obama effectively told congressional leaders that while he'd let them know what was going on, he didn't need any new permission to act in Iraq.

While a White House statement emphasized that Obama would continue to consult with Congress, Senate Republican leader Mitch McConnell said the President "basically just briefed us on the situation in Iraq and indicated he didn't feel he had any need for authority from us for the steps that he might take."

Several military sources have confirmed to CNN that manned reconnaissance flights over Iraq to collect up-to-the-minute intelligence on ISIS movements and positions have begun. Unmanned reconnaissance flights have been going on already for several days.

The United States withdrew its final troops from Iraq at the end of 2011, nearly nine years after leading the invasion of Iraq that toppled longtime leader Saddam Hussein.

At the time of the U.S. drawdown, Iraq's leadership had agreed that a residual U.S. military presence was desirable, but talks broke down over the prickly issue of legal immunity for U.S. troops in Iraq.

Wednesday, June 18, 2014

Sunni militants are reportedly now in control of most of Iraq's largest oil refinery, which provides gas to about 25 percent of the entire country.

The ISIS fighters began shelling the refinery in Baiji on Tuesday night and into Wednesday morning. An official told Reuters from inside the facility that "the militants have managed to break in to the refinery. Now they are in control of the production units, administration building and four watch towers. This is 75 percent of the refinery." The government, however, maintains that its forces still have control. According to Iraq's counter-terrorism spokesman Sabah Nouri, government forces killed 50-60 insurgents and set 6 or 7 militant vehicles on fire to stave off the attack.

If ISIS starts siphoning gas for its own purposes -- as militants did during the sectarian insurgency of 2004-2007 -- the group would have a steady source of income and make conditions even worse for Iraqis, who could see power outages and long lines at gas stations as a result of the siege.

Meanwhile, Iran has vowed to help Iraq's Shiite government fight ISIS. Iranian President Hassan Rouhani said on Wednesday that "we declare to all superpowers, their mercenaries, murderers and terrorists that the great Iranian nation will not miss any effort in protecting these sacred sites." Thousands of Iranians have already volunteered to help defend Iraqi shrines.

Turkey has also commented on the situation, casually dropping that it might no longer be opposed to a totally autonomous Kurdish state in Iraq. The Iraqi Kurdish population has long sought independence, and their militia was the first to take a stance against ISIS when clashes began last week. The Kurdish fighters took the opportunity to secure control of the city of Kirkuk, as they have hoped to do for years. Turkey is also concerned by reports that Turkish oil workers have been kidnapped by ISIS fighters, and India is troubled by similar reports about its own nationals working in Turkey.

As Iran offers its army to Iraq, Washington maintains that it won't send in troops beyond the 275 soldiers deployed to protect U.S. assets in Iraq. It is still, however, considering other options, such as targeted air strikes or setting up special forces to deal with the escalating situation.

HOUSTON, (UPI) --The expansion of a contract with General Dynamics for a 300,000-barrel oil tanker exemplifies a commitment to U.S. marine transport of oil, Kinder Morgan said.

Kinder Morgan said it expanded its contract with General Dynamics for the design and construction of a tanker scheduled for second quarter 2017 delivery.

"We are delighted to build an additional tanker, supported by a long-term charter with a major shipper, which clearly demonstrates Kinder Morgan's ongoing commitment to marine transportation of crude oil, condensate and refined products in the United States domestic trade," Rob Kurz, president of a petroleum tanker subsidiary at the company, said in a statement Monday.

The tanker will be constructed at a shipyard in San Diego, which meets the requirements of the Jones Act of 1920 requiring ships transporting cargo between U.S. ports to be built at U.S. shipyards.

Kinder said the new tanker will join four other tankers under construction at General Dynamic's shipyard in San Diego.

The unrest in Iraq isn't affecting oil markets or the country's oil output, the secretary general of the Organization of the Petroleum Exporting Countries said Monday.

Speaking on the sidelines of the World Petroleum Congress, Abdalla Salem el-Badri said: "Nothing is affected. production is still going well and exporting is going fine."

He said he doesn't expect the recent wave of unrest in the country to affect the balance of the supply and demand of the oil market.

The US and Iran have publicly committed in recent days to provide military support if requested to Iraqi Prime Minister Nouri al-Maliki and help his government repel an offensive the Islamic State of Iraq and al-Sham has launched against Baghdad and other Iraqi cities over the past week.

"I hope that Iraq situation will go back to normal very soon," said the head of OPEC.

Overnight, US oil traded little changed at nine-month peaks, while Brent rose modestly as investors watched the unfolding sectarian conflict in Iraq for signs it could disrupt oil supplies.

US benchmark West Texas Intermediate for July delivery slipped one US cent to $US106.90 a barrel.

In London, Brent North Sea crude, which tends to react more to international geopolitical factors than WTI, rose 48 US cents to settle at $US112.94 a barrel. It was the first day of trade of the futures contract for August delivery.

Chika Amanze-Nwachuku writes that the recent decision by the federal government to allocate crude contracts to mainly Nigerian companies is proper measure to right past wrongs in the management of the nation’s oil resources

Over the years, permits for yearly crude term lifting contracts were granted to mainly foreign companies that have no known investments in Nigeria.

Most of these regular beneficiaries of crude lifting contracts are ‘brief case’ concerns, which only existed in the books of the Corporate Affairs Commission (CAC).

Other regular beneficiaries were few Nigerian companies owned by retired military chiefs, top politicians, government’s cronies and their fronts.

In violation of stipulated guidelines for lifting of Nigerian crude, the Crude Marketing Department of the Nigerian National Petroleum Corporation (NNPC), acting on the directives of Nigerian authorities and the powers-that-be in the ministry, allocated higher volumes of Nigerian crude to ‘paper’ companies, which in turn sell the allocations to more established traders since they lacked the capacity to handle the business.

Some international oil traders like Glencore, Travigura and Vitol were are among the among the most favoured as they often got as much as 60,000 barrels per day (bpd).

In 2008, about 42 companies were granted permit to export between 30 to 60 bpd of crude oil. Of the 28 companies, only seven were said to have investments in Nigeria, the others were said to have no known investments in the country.

The list obtained by THISDAY then, showed that foreign companies were allocated biggest volumes of 60,000bpd each, whereas the few indigenous companies got between 10,000 and 30,000 bpd.

Following the criticisms that greeted the allocations, the late President Umaru Musa Yar'Adua was said to have directed the NNPC authorities to prune the list, having failed to produce the criteria for award of the contracts to mainly foreign entities.

Also, the corporation’s failure to come up with convincing reasons why most of the companies should be retained in the crude contract list, prompted the late president to slash the list to only about 24, notwithstanding that the NNPC authorities tried to convince him that the foreign traders were well known to the corporation.

However, despite government’s efforts to redress the wrongs in crude contracts allocation and the pressure on the NNPC by indigenous stakeholders to review the crude contracts guidelines with a view to giving indigenous players preference to participate in the deal, foreign players still dominated the crude lifting business.

In June, 2010, the corporation released very a new guideline for the oil lifting contracts. The guideline stipulated among others, that companies, which wished to lift Nigerian crude must prove that they are bona fide end users and that they are established and globally recognised large volume traders with evidence of their global network, their activities, and volumes of crude oil handled in the last three years.

Participating companies, according to the guidelines were also required to provide evidence that they are registered Nigerian companies with operations in Nigeria's oil and gas industry.

They were also to possess a minimum annual turnover of at least $100 million, in addition to net worth of not less than $40 million.

Another condition was that participating firms must show commitment to the development of the Nigerian economy by investing in any number of opportunities that abound either in the oil industry or gas sector.

Selected companies were then required to post a $1 million performance bond through a first class Nigerian bank in addition to the regular crude oil contract provisions, while special or privileged allocations were completely ruled out. Only few local companies participated in that year, because most local firms were unable to meet the condition.

In line with the spirit and letters of the Nigerian Content Act, the guidelines issued for crude oil lifting contract in 2011 required participants to show evidence of compliance with the Act.

The previous guidelines also required evidence of yearly turnover of $500million; minimum net worth of $100million; and investment in the upstream sector to increase national oil reserves and production capacity.

Other requirements were: evidence of investment in the downstream projects, refining, petrochemicals, distribution and storage of petroleum products, gas utilisation projects; Independent Power Projects (IPP); and readiness to invest in railway. Again many indigenous firms could not scale the hurdle.

More stringent condition

A more stringent condition was provided in the 2012 tender. This time, the NNPC excluded investments in the country as part of the criteria and instead jacked up the yearly turnover and net worth to $600 million and $300 million, respectively.

The scheme favoured mostly foreign contractors with very deep pockets and easy access to international capital, because the guidelines also provided that each applicant would pay a $5 million deposit before buying the first oil cargo.

In apparent bid to ensure that indigenous companies with massive investments in Nigeria were disqualified, the NNPC also required that the applicants should be bona fide end users of crude oil who own refineries and should also provide evidence of their facilities and the volume of crude oil refined over the last three years.

Indigenous operators fault guidelines

But the crude lifting guidelines had drawn the ire of indigenous stakeholders, who noted that it violated the Nigerian Content Law, which was signed by President Goodluck Jonathan on April 22, 2010.

The local operators alleged that the NNPC authorities deliberately made the conditions very stringent so as to favour only foreign contractors for selfish interest.

They pointed out that Clauses 2 and 3 of the Nigerian Content Act provided that indigenous Nigerian companies should be given first consideration in the award of all contracts in the oil and gas sector, and posited that by making the conditions too stringent, the corporation had effectively excluded local companies from the crude lifting contracts.

They further argued that contracts were normally awarded to the lowest bidder but as part of the strategies to boost increased local participation in the industry, the Nigerian Content law also provides that indigenous contractors must be awarded certain contracts, even when their bid price is higher than that of foreign contractors by up to 10 per cent.

They posited that the importance attached to the Nigerian Content law was evidence in the guidelines issued for crude oil lifting contract in 2011 wherein participants were even required to show evidence of compliance with the Act.

However, the NNPC maintained that it had not violated any law, and explained that the measures were aimed at ensuring that only "fit and proper" firms participated in the crude oil term contract.

Due to the stringent guidelines, only 21 Nigerian firms were among 50 oil companies which scaled the screening by the NNPC to lift crude during the stated period.

Local firms win big

Unlike the previous contract, where stringent conditions had to be met, thereby denying Nigerian companies the opportunity to participate in the crude term lifting business, the 2013/2014, as well as the 2014/2015 guidelines were favourable to indigenous companies.

Specifically, the 2013/2014 crude term contracts required applicants to show details of their facilities, markets and volume of crude processed over the previous three years or, in the case of traders, evidence of its global network, activities and volume of crude oil handled over the previous three years.

However, indigenous companies were exempted from these stringent entry requirments and were only required to show evidence that they engage in Nigerian oil and gas business. The idea was to make it easier for more indigenous companies to participate in the deal.

Also, of the 43 companies that obtained permit according to the recently expanded list for 2014/2015 crude lifting contracts, 28 winners were Nigerian firms, with two new bilateral government deals with Chinese state refiner Sinopec and India's state-owned refiner Indian Oil Corporation added.

Although, it has not been ascertained whether the list released last week, which expanded the contracts to about $52 billion worth of crude, up from $40 billion in the April list was final, more than half of the beneficiaries were Nigerian companies.

The bulk of the Nigerian companies, according to reports, would receive about 30,000 barrels per day (bpd) during this period.

In a break with tradition, no contracts were issued directly to global traders Glencore, Vitol, Trafigura or Gunvor, with only Switzerland's Mercuria awarded a deal. Industry sources said that these firms may still trade Nigerian oil, either through buying from Nigerian firms or through partnerships.

The total number of deals with foreign governments was just three, including Malawi, down from 10 last time. Deals with neighbouring West African countries Senegal, Burkina Faso and Ivory Coast were not renewed. Of the eight newly added Nigerian companies, only three were awarded contracts in the last round.

The new list also comprised subsidiaries of Emmanuel Ojei's holdings

company Nuel Okei, Emo Oil and Petrochemical Co and Team Trade Petroleum Development Co.

Minister defends decision

Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke had explained that the contract awards to mainly indigenous companies, was aimed to encourage effective local participation in the industry.

She said the decision was a deliberate policy of the Federal Government to encourage Nigerians to participate in the oil and gas sector of the economy.

In a statement issued by the Group General Manager, Group Public Affairs Division of the NNPC, Mr. Ohi Alegbe, over 60 per cent of the 2014 to 2015 annual crude lifting contracts was awarded to local firms after a painstaking pre-qualification process.

The balance of 40 per cent was shared among some international trading companies, refineries and some countries with bilateral trade agreements with Nigeria.

“When we unveiled the Nigerian content law a few years back, the overriding principle was to grow indigenous capacity in an aggressive manner.

“I am happy to report that today, in the oil and gas sector, Nigerian content has been placed on the path of irreversible progress,” the minister was quoted to have said.

The Nigeria's policy has been to increase the role played by local firms, both in operating oil blocks and crude oil trading. The main aim was to bring to an end, decades of control over the business by foreign majors.

Although many Nigerians have argued that the beneficiaries are mainly government cronies and political backers, stakeholders however viewed this development as a proper measure to right the past wrongs in the award of crude term lifting contracts.